Zambia, a landlocked country in southern Africa bordered by the Democratic Republic of the Congo to the north, Tanzania to the north-east, Malawi to the east, Mozambique, Zimbabwe, Botswana, Namibia to the south and Angola to the west, has a population of roughly 15.5 million and ranks a 139 out of 188 in the recently published Human Development Index for 2015 (UNDP).

The country was for many years the world’s largest producer of copper, which brought considerable income to the country and pushed its GDP to lower middle-income status (World Bank). However, the Zambian economy became very one-sided and dependent on the copper mining industry. This dependence also made the country vulnerable to unstable copper prices on the world market and the resulting shocks of these on the country’s economy. Shocks that have also brought about the realization that the country needs to diversify its economy.

Agriculture is one of the focus areas of this diversification. Seventy percent of the population is employed in the agricultural sector, mainly as smallholder subsistence farmers, in spite of the prominent role of the mining sector. The sad reality is also that despite the large income generated from the copper mines, poverty is still widespread as 60% of the population lives below the poverty line and 42% are considered to be in extreme poverty (World Bank).

Agriculture provides a small but growing contribution to GDP, but if this contribution is going to reach its full potential, substantial impact investments are needed. Increasing access to technology is key in this transition to ensure an increase in agricultural yields, and the company Rent to Own is playing an important role in making agriculture equipment available to smallholder farmers through their hire purchase business concept.

I spoke to the Rent to Own team before Christmas to learn more about their business model and the impact they are having on the agricultural sector in Zambia, and the potential their business model has to be scaled up to other African countries. A big thank you to the Rent to Own team. Look forward to seeing you expand your reach and changing lives along the way!

How did Rent to Own get started? Where did the idea come from?

Rent to Own (RTO) was co-founded by Mark Hemsworth from Canada and his Zambian counterpart Patrun Chikolwizu in 2010. At the time both were working with Forest Fruits in northwestern Zambia, a company that sources honey from smallholder producers. Through extensive interactions with farmers and rural businesspeople, Mark and Patrun saw the demand for equipment that could improve livelihoods of these people, but such equipment was not available or affordable to them. Hence came the idea of selling productive assets on hire purchase, in an all-in-one package solution that allows clients to acquire and repay both the asset and financing, through payment schedules tailored to clients’ income streams, last-mile distribution, and technical assistance.

What is the vision for the business?

We want every person in Africa to have access to the tools they need to live a better life.

The company aims to be the first-choice provider of quality assets across rural Africa, and to provide impactful products and access to credit to over one million direct beneficiaries by 2022.

We are continuously working to expand our product range and carrying out tests with select clients.

RTO client using an irrigation kit

What are the most popular products?

The top selling products vary considerably depending on the type of client, but include: pumps, mills and presses for farmers, refrigerators for shopkeepers, and bicycles for dairy producers.

Who are your typical clients?

Ruth Nyirongo is from the farming area of Chibombo District, Zambia where she produces cabbage and tomatoes to sell at local markets. A few years ago, she started working with RTO in order to expand her farming business through irrigation. At the time, Ruth had to water her crops by hand, drawing water from a nearby well with buckets. While this was proving effective, she was unable to expand her farm further to meet the demand for her produce. Now with her own water pump, whether in the rainy season or dry season, Ruth is able to grow and sell her produce throughout the year. The use of a pump also means that she is able to irrigate a larger portion of land in less time and without being restricted by the tiring task of carrying buckets of water to her crops. After having successfully completed her first hire-purchase contract, Ruth came back to us in 2015 and bought her second piece of equipment.

Ruth is just one of the 1800+ clients whose lives have been changed by RTO’s intervention. They are smallholder farmers growing vegetables on 0.25-5 ha of land like Ruth, emerging farmers who cultivate 5-10 ha of land, shopkeepers who operate small grocery shops or lodges, and dairy farmers who typically own 2-10 cows.

Based on the Grameen Foundation’s Progress out of Poverty Index (PPI), the majority of RTO clients have a small asset base, and they are likely to earn less than $2.50/day. Working with RTO helps clients to build their asset base and improve their income situations.

Ruth Nyirongo – one of the many Rent to Own success stories

What selection criteria to choose the clients to work with?

Unlike a lot of banks, MFIs, and equipment suppliers, RTO does not require group financing or collateral. With our in-house client approval system, we evaluate applications against a range of criteria relevant to different client categories (we call these “product lines”). Each RTO product line targets a specific client profile, with clients divided according to their primary methods of income generation. Approvals are based on an evaluation of each applicant’s income-generating activities. Therefore, application data collected varies according to the client profile associated with each product line, and according to the product requested.

New RTO client filling out an application form

How many clients have you had so far? And what are your goals in terms of outreach?

Since our establishment in 2010, we’ve served over 1,850 clients and directly improved the livelihoods of 12,500+ people in Zambia as of December 2015. Of these clients, roughly 75% are men and 25% are women. For 2015, we can see a trend where the female ratio is increasing and we hope to see this continue into 2016.

We are also currently working to re-engage more of our clients to come back for a 2nd piece of equipment. This year we had a quite special client, who has purchased 4 pieces of equipment so far. Returning clients are a real sign that we are making positive impact in the farmers’ livelihoods, just as with clients who come to us through referrals.

The total value of assets disbursed has reached US$ 1.8 million, and this is just the beginning.

Tell me about the Rent to Own team?

Headquartered in Lusaka, we are a team of over 30 full time staff and over 40 commission-based sales agents from the communities served by RTO. Our field operations span across 8 districts in 3 provinces in Zambia. Field operations are directly overseen and managed by seasoned field managers with proven track record of problem solving capability on the ground.

RTO equipment getting ready to be delivered

How many pieces of equipment have you rented so far? How many are now owned by farmers?

In the span of five years RTO has disbursed nearly 2,000 pieces of equipment, of which over 1,300 we have transferred ownership to the client, and over 600 are still being paid for.

What has been your biggest inspiration?

The people of Zambia inspired the inception of the business – the drive of each entrepreneur to grow, to do better for themselves and their children made us believe that a solution such as RTO can work.

What has been the greatest challenge/obstacle to your business?

We’ve strived to understand our clients and develop new products that can meet the needs of their businesses, at prices that clients can afford. As we expand, we’ll continue to put our clients first and adjust our offering to cater to their demand. Additionally, due to the nature of our business, we’ll need to raise money to source equipment to be disbursed to clients and thus maintain momentum on our growth path.

On the macro level, RTO is faced with slower economic growth in Zambia and depreciation of the local currency, which require us to constantly gauge their repercussions on our business and develop strategic plans to cope with a challenging macroeconomic environment.

Field meeting with Dairy Coop partners in Cooperbelt

If you had the power to improve one thing for entrepreneurs in Zambia – What would it be?

Access to our services is what we strive to provide to each entrepreneur. After that – access to mobile money like MPESA of Kenya and the growing access of Zoona across Africa.

What has been your biggest achievement?

Proving that the model works! We’ve achieved a sustainable collection rate while we continue growing.

If you could give one piece of advice to an aspiring entrepreneur in Zambia/Africa – what would it be?

Keep trying. If your first idea doesn’t work, no problem, now you’ve learned, try another one…and keep trying until you find the right one for you.

Do you have plans to expand to the business to other African countries?

Absolutely. We’ve spent five years to build, trial, and fine tune a business model that is designed to be scaled up. Our lean field operation organized into individual branches and innovative back end technologies allow us to quickly expand to new geographies both across Zambia and to other African countries in the region.

Rent to Own staff celebrating the signing of the 1000th client!

Where do you see your business in 10 years? And the near future?

We aspire to become a regional leader in providing access to high-impact assets across rural Africa. To get there, the business will grow its offering and expand to new locations in the near future. We will refine programs to grow with each client so that over time they build their asset base and their credit rating simultaneously. Ten years from now, we will have hundreds of locations in multiple countries in Sub-Saharan Africa.

]]>http://rtoafrica.com/rent-to-own-boosting-agricultural-growth-with-smallholder-farmers-in-zambia/feed/0Rent-to-Own Featured in Forbes Articlehttp://rtoafrica.com/rent-to-own-featured-in-forbes-article/
Thu, 28 Feb 2013 10:08:46 +0000http://rtoafrica.com/?p=3173read more →]]>Rent-to-Own was recently featured in an article on Forbes.com. The article submitted by Ashoka, highlights Engineers Without Borders Canada, and their support for “Smart Ventures” such as Rent-to-Own.

“As part of EWB’s poverty alleviation efforts, trained engineers collaborate with social entrepreneurs working on the ground to make a difference in their communities. Many of these entrepreneurs are beyond the initial start-up phase, but have not yet reached a point where they can scale-up and attract large investors—Roter terms this the “pioneer stage.” The work of EWB allows people at the pioneer stage to develop strategic and manageable growth within their organizations, which will allow them to develop into large-scale mechanisms for social change.

Rent-to-Own, for example, is a current for-profit venture incubated by EWB. It was founded by a Canadian EWB overseas volunteer and a Zambian coworker and provides alternative asset-based financing to rural Zambian entrepreneurs. The program allows entrepreneurs like Patricia, the baker with “the best buns in Katete,” to make a 10 percent down payment on new equipment, then pay the remainder of the cost in 10 monthly installments. Rent-to-Own is a “smart venture” because it serves a unique niche of developing entrepreneurs who cannot access traditional financing, nor microfinance, in addition to representing an unprecedented alternative to business development within Zambian communities.”

]]>RtO Staff Meet in Lusakahttp://rtoafrica.com/rto-staff-meet-in-lusaka/
Wed, 12 Dec 2012 10:04:43 +0000http://rtoafrica.com/?p=3168read more →]]>The Rent-to-Own team recently met to lay the foundation for our next phase of growth. It was great to have all of our staff members present, sharing their current challenges, and sharing in the vision for our next year. For many of our field-based staff, it was the first time they were able to meet face-to-face with staff from other regions.

The team is excited to build on the successes of the past year and continue to serve rural Zambia.

]]>RtO Begins Using Zoona Mobile Payment Systemhttp://rtoafrica.com/rto-begins-using-zoona-mobile-payment-system/
Mon, 19 Nov 2012 10:02:18 +0000http://rtoafrica.com/?p=3165read more →]]>Rent-to-Own is pleased to announce that we have begun using Zoona to process payments from our clients. The Zoona system allows our field officers to instantly process payments using their android-based phones.

Not only does Zoona allow for quick and easy payment processing for our field officers (instead of having to hold onto cash for extended periods of time before travelling to the nearest bank), but it provides our clients with added payment security as they receive an SMS confirming RtO has received their payment.

We are very excited to work with Zoona as we each grow to better serve rural Zambia.

]]>Rent-to-Own Featured in Canadian Mediahttp://rtoafrica.com/rent-to-own-featured-in-canadian-media/
Thu, 15 Nov 2012 09:59:51 +0000http://rtoafrica.com/?p=3163read more →]]>In a recent article published in Canada’s National Post about Engineers Without Borders (EWB) Canada, Rent-to-Own was highlighted as a successful new company working towards helping rural Zambians become self-sufficient entrepreneurs.

]]>Lundin for Africa Invests in Rent-to-Ownhttp://rtoafrica.com/lundin-for-africa-invests-in-rent-to-own/
Fri, 15 Jul 2011 09:49:54 +0000http://rtoafrica.com/?p=3161read more →]]>Lundin Foundation has placed a $ 175,000 combined equity and debt investment in Rent-to-Own. Importantly, LFA has committed as a lead investor for the next 4 years.

Lundin for Africa (LFA) is the philanthropic arm of the Lundin group of companies. The Foundation embodies the the entreprenerial roots of the Lundin family by investing finances and technical assistance into small businesses in Africa that have demonstrated high potential for impact and growth.

This is an exciting opportunity for Rent-to-Own to work directly with an organization well versed in the challenges that many growing enterprises face.

About the new deal with LFA Rent-to-Own Founder and Director Mark Hemsworth says: “The move is much more than money. LFA is working to help us transition from a sole-proprietorship operation to a full on corporation with solid legal l and financial footing.”

And the first move towards this has been the identification of Rent-to-Own’s first CFO. This new member of Rent-to-own Senior Management team will better support the organization’s growing pipeline of potential investors as well as ensure ongoing rigorous financial management. The new CFO is expected to begin with Rent-to-Own at the end of September, 2011.

LFA’s investment in Rent-to-Own is the first of many indications to come that the organization is positioned for strong growth in the coming years.

]]>Mark Hemsworth is chosen to join Rainer Arnhold Fellowshiphttp://rtoafrica.com/mark-rainer/
Fri, 01 Jul 2011 07:38:46 +0000http://rtoafrica.com/?p=3154read more →]]>Rent-to-Own Founder and Director Mark Hemsworth has been chosen to join the Rainer Arnhold Fellowship program for social entrepreneurs.

Rainer Arnhold Fellows are individuals with exceptional ideas that can foster high-impact changes for those living in poverty. This prestigeous 2 year program is comprised of social entrepreneurs with particularly promising solutions to development challenges in the health and livelihoods sectors.

Importantly, the program provides tailored support so that the Fellows can scale up their ideas by leveraging a network of leaders in the social and private sector.

“It is an honor to be chosen for this program,” says Mark. “I am confident that the Rainer Arnhold Fellowship program will help better position Rent-to-Own to increase our overall social impact in the long-term.”

Mark will be among exceptional company as a newly-chosen Fellow. Many leaders in the fields of social enterprise and international development have been a part of this exciting program to date spanning unique ideas in microfinance, health franchising and environmental protection.

We will continue to follow Mark’s progress as he begins his exciting journey as Rainer Arhnold Fellow – making certain to share the positive impact that this opprotunity will have on Rent-to-Own’s future.